In the wake of a series of diplomatic efforts aimed at reducing tensions between Iran and the United States, the value of the Iranian currency rial rose 1.8 percent against the dollar on Tuesday.
Various currency websites at midday Tuesday local time in Iran reported the rial trading at just below 110,000 to the dollar. In July the dollar stood at above 120,000 rials and in March it was trading at 150,000 rials.
It is not clear if optimism about a diplomatic breakthrough is the sole reason for the rise in the value of the Iranian currency, but in the past the rial has been very sensitive to news about Iran’s economic isolation and sanctions on oil exports.
In 2017, before President Donald Trump signaled his intentions to withdraw from the 2015 nuclear agreement, the rial traded at less than 40,000 to the dollar. By the beginning of 2018, the Iranian currency began a steep decline, which went as far as the rial hitting close to 200,000 against the dollar.
The Iranian Central Bank has acknowledged active interventions to shore up the rial and Iran’s security forces have gone after currency and gold traders, trying to rein in speculation.
The devaluation of the currency has badly hurt ordinary Iranians as prices for essential goods have skyrocketed, with inflation close to 50 percent.
U.S. sanctions have reduced Iran’s oil exports by 90 percent, cutting off the most important source of income for the government.